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Third Party Beneficiaries

A promises B to pay B $50 if B stands on one foot, in a two party contract B gets the benefit. In a third-party contract A promises B to pay C $50 if B stands on one foot. B does not get the benefit C does.
(Pr) (Pee)
A --------- B
C
Handout- Use this T-Chart on EXAM and get 5 POINTS and clearly IDENTIFY!!!!!!!!!
Make the chart, identify the players.
Then ask is the third party a third party beneficiary? Did B intent to provide a benefit to the TP?
Only have to know that Hybrid Test.

What if there was a promise to his sone that he would buy him a car if his son agreed to go to law school. The judge did not buy him a car can the car company sue the judge?

Mgm is suing judge Hardy. Did andy intend to benefit MGM. No, since there is no intent the rest of the sheet is irrelevant. For the exam, run the whole sheet.

Incidental beneficiaries- the benefit they anticipated was purely a fortuitous and incidental result of a transaction between others. Is the car dealer incidental? The Judge would argue that he was. The car dealership would try to argue that he was and intended beneficiary and that his benefit is not merely incidental, but is clearly contemplated and deliberately conferred.

What if J payed MGM 20,000 to deliver a car to S when he turned 15. But J died before than and MGM never delivered the car

Did the judge intent to provide a benefit to A. Yes
Is the Pr promise enforceable. Yes because the Judge paid MCM $20 K
Is A a creditor of the Judge? NO this is a donee beneficiary gift.
Hybird- Donee vest when he knows and the assents.

Judge owes A 20 K not that makes Andy a Creditor. Then andy’s rights do not vest on knowledge just reliance.

In this problem the promise is rendered not to the promise but to the beneficiary.

Whether privity of K must exist between Df and Pl in order for the Pl to seek recovery against the Df?

No.. where one person makes a promise to another for the benefit of a third person, that third person may maintain an action upon that promise

TPB-

Example of a no privity of K

Lawrence

Relevant Facts: Holly loaned the Df, Lawrence $300. Df agreed to pay the $300 to the Pl Fox, for a debt that Holly owed to Pl, the next day.
The promise was made to Holly and not expressly to the Pl; but in this case the Df, upon ample consideration received from Holly, promised Holly to pay his debt to the Pl; the consideration received and the promise to Holly made it his duty to pay the Pl as if the money had been remitted to the DF for that purpose, and as well implied a promise to do so as if he had been made a trustee of property to be converted into cash. “That a promise made to one for the benefit of another, he for whose benefit it is made may bring an action for its breach,”has been applied to trust cases. The Pl did not release the Df from his promise. No one can doubt that the Df owes the sum of money demanded of him, or that in accordance with his promise it was his duty to have paid it to the Pl.

What is novation?

Novation- is a substituted contract that includes as a party own who was neither the obligor nor the oblige of the original duty. Pr and a Pee and a tpb who is a creditor. The promise owes money to the Third Party Beneficiars. When the promisor makes the promise to pay money. Is the promise still liable? Yes, unless a novation has occurred. What does a novation mean, we are looking at the relationship it being between a debtor and a creditor can not release unless it is expressly released. problems 168, 169, 170

Can a beneficiary sue when the benefit was given to her when the person that was going to give it to her was on her death bed?

Seaver v. Ransom

Where testatrix had intended to leave her house to a beloved and favorite niece, but upon husband's promise, made to her while she was in extremis, to provide for niece in his will, signed a will prepared by the husband, leaving the remainder of wife's estate, after her husband's death, to another, the niece, upon husband's failure to provide for her in his will, is entitled to enforce the contract as one made for her benefit.

Municipal Contracts-

Can someone who recieves a public benefit sue when he feels that he has been wronged?

H.R. Moch Co. v. Rensselaer Water Co.

A wrongdoer who by negligence sets fire to a building is liable in damages to the owner where the fire has its origin, but not to other owners who are injured when it spreads. So a member of the public ccan not maintain an action against one contracting with the city to furnish water at the hydrants UNLESS an intention appears that the promisor is to be answerable to individual members of the public as well as the city for any loss ensuing form the failure to fulfill the promise.

Pr- Water,
Pee- City
TP Moch

Did the city intend to benefit Moch? No, they are an incidental beneficiary and they have not rights under Pr  Pee contract.

Excercise on promisor and promisees

To find the promisor you ask yourself which one of the original contracting parties make a promise to the other that benefits a third party. The Promisor is almost always the D.

The promisor in this case would be Hoban construction because they made a promise to John Adams that they would get a surety.

The promise will be the original contracting party to whom the promise is made. It is the promise’s relationship to the third party beneficiary that determines the legal results.

In this case the promise would be John Adams.

The third party beneficiary is the stranger to the original contract who is benefited thereby. Stranger is the plaintiff.
problem 171

What is the difference between a creditor, donee and an incidental beneficiary

Donee- the purpose of the promise in obtaining the promise of all or part of the performance there of is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due nor supposed to be asserted to be due from the promise to the beneficiary.

Creditor- if no purpose to make a gift and performance of the promise will satisfy an actual or supposed or asserted duty of the promise to the beneficiary

Incidental- if neither the facts sated look like a creditor or a donee

What is the Miller act?

- general contractor must furnish a payment bond. Although property of the US is not subject to any mechanic’s lein, subcontractors and suppliers who meet specific time and procedural requirements

Intended and Incidental Beneficiaries

Expanding use of third party beneficiary concepts

The prisoner alleges that he was attacked by a fellow prisoner and that Defendants and the state were negligent in permitting the assault. State argues that they can not be sued because of the doctrine of sovereign immunity permist such suit only after waiver by a legislative act. However this court found that the State by entering into a contract with the US waived any defense available to them because of Sovereign immunity and that would make the P a creditor.

The P was a person that the state contracted to safekeep, to care for and to provide with substance. He has not only a direct interst in the contract but a right to enforce it as against the state if it fails to provide the requisite minimums.

Held that the P can sue the state and such a right may be denied by firture of the sovereign immunity doctrine to state prisoners held in the same institution. But a different result would mean that P would be without a remedy which is available under the Federal Trout Claims Act.

Can you argue that you are a third party beneficiary to the benefit or loss as a result of a team winning or losing a game?

Bain v. Gillispie

Bain is the referee who made a call that caused Iowa to loss a game and not make it to the big 10 conference. The Gillispies were owners of a sports store that would be benefited greatly if Iowa had made it to the big 10. The Gillispie’s are suing stating that Bain’s conduct was below the standard of refereeing. He is arguing that the T-shirt that they made is offenseive and that he deserves injunctive relief, actual and punitive damages.

The question is if the Gillispies are direct beneficiaries or incidental to the contract the existed between Bain and the referee people?

It was held that “the real test is said to be whether the contracting parties intentd that a third person should receive a benefit which might be enforced in courts. “It is clear that the purpose of any promise which Bain might have made was not to confer a gift on Gillispies. Big 10 did not own any duty to the Gillispies that would have been creditor beneficiars. If a K did exist between B and the 10 G can be considered nothing more than incidential beneficiaries- without the ability to maintain an action.

Can an estate sue against a person who could have been responsible for the death of an individual argueing that they were a third party beneficiary of his contract with the boxing association that hired him to referee the fight?

Problem 172- 789
Yes, because the referee was hired to protect the interest and well being of the boxers. He failed to do so. Since the boxers are beneficiaries they are able to sue on the K.

Examples of Third Party Beneficiaries:

An injured tort victim sues the insurance agency that issued a polisty to a tortfeasor.

Injured third party sued insured and its liability insurer for the cost of cleaning up contamination allegedly caused by insured's negligence. On insurer's motion for summary judgment, the Superior Court, New Castle County, Barron, J., held that injured third party could not maintain direct action against insurer before a determination of insured's liability.
Motion for summary judgment granted.

Following judgment for injured driver against insureds in personal injury action arising out of automobile accident, injured driver brought action against insureds' insurance agent, alleging agent's negligence in failing to obtain optional liability coverage on insureds' vehicle and failing to advise insureds of policy limits, and breach of contract to obtain optional liability coverage. Agent moved for dismissal. The Superior Court Department, Plymouth County, Elizabeth J. Dolan, J., granted the motion and entered judgment for agent, and driver's request for direct appellate review was granted. The Supreme Judicial Court, O'Connor, J., held that: (1) injured driver did not foreseeably rely on insureds' motor vehicle being insured in amount greater than that required by law and thus, insureds' agent was not liable in tort to driver for failure to procure optional liability coverage, and (2) driver was intended beneficiary of alleged contract wherein agent promised to obtain optional liability coverage on insureds' vehicle.
Reversed and remanded.

Corporate shareholders sue to prevent the breach of a merger agreement between their corporatoin and another

Corporation brought action against second corporation and its subsidiary for anticipatory breach of merger agreement and majority shareholders of plaintiff corporation intervened, seeking damages for diminution of value of their stock. The 17th District Court, Tarrant County, Charles J. Murray, J., struck petition in intervention. Majority shareholders appealed. The Court of Appeals, Keltner, J., held that: (1) shareholders were third-party beneficiaries of corporate merger agreement, and (2) provision of merger agreement stating that agreement "is not intended to confer upon any other person any rights or remedies hereunder . . . " did not bar shareholders from bringing suit under agreement.
Reversed and remanded.

A school bus driver, injured when the brakes failed, sues the entity that sold the buse to the school district

Employee of company which subcontracted to provide transportation to students, and who was injured when the brakes on a bus purchased from contractor failed, sued contractor for breach of contract. The Circuit Court, Jefferson County, No. CV-84-5379, Arthur J. Hanes, Jr., J., entered partial summary judgment for contractor, and employee appealed. The Supreme Court, Houston, J., held that: (1) it could not conclude as a matter of law that the school board relieved contractor of its obligations under the contract and established a new contract with subcontractor for transportation of the students, and (2) employee could not recover under a third-party beneficiary theory.
Affirmed.
Jones, J., issued a dissenting opinion.

A bookstore employee who was raped when the security system's alarm failed sues the seller of the system

Employee of business which had electronic security system installed brought action against security company after she and her husband were accosted at knife point by assailant outside of employer's premises and forced inside building. The Court of Common Pleas, Montgomery County, granted summary judgment in favor of security company, and appeal was taken. The Court of Appeals affirmed. On motion to certify record, the Supreme Court, Moyer, C.J., held that: (1) security alarm system company did not owe duty of protection to employee, and (2) employee was incidental beneficiary of contract between employer and security system company.
Affirmed.
Sweeney and Douglas, JJ., dissented.

After the mother died, the father stopped making payments under the divorce property settlement and is sued by his daughter for missed payments and the cost of going to college

Child brought action to enforce property settlement agreement incorporated as part of divorce decree. The Second Judicial District Court, Washoe County, Robert Schouweiler, J., determined that child lacked standing to enforce payment of child support arrearages and that former husband was responsible for costs of child's tuition. Child appealed. The Supreme Court held that: (1) child was third-party beneficiary of agreement and had standing to enforce payment of child support arrearages; (2) property settlement agreement obligated former husband to make child support payments until child who was attending college reached 22 years of age; and (3) former husband was obligated to pay overdue tuition.
Reversed and remanded.